This Scam Targets Your Tax Refund. Here's How to Protect Yourself

Doubling down on an earlier warning, the advisory alerted individuals that “more tax practitioners’ computer files have been breached. In addition, the number of potential taxpayer victims jumped from a few hundred to several thousand in just days.”

Here’s what you need to know about the scheme, and how to protect yourself.

How are scammers targeting refunds?

There are several versions of the scam, but they all boil down to the same thing: Scammers gain access to sensitive consumer data, such as Social Security numbers, bank account information and more, and use it to file false tax documents. The refunds are then deposited into victims’ actual bank accounts.

Then, victims are contacted by scammers posing as IRS agents, who explain that the refund was a mistake, and provide directions for returning it. (Sometimes, the scammers will threaten the person with criminal charges or “blacklisting” their Social Security number.) When the individual follows these instructions, the thief pockets the money.

How are scammers getting this information?

Often, according to the IRS, scammers access the information by targeting tax preparers. They may use phishing and other tactics to steal the data from tax professionals’ computers.

What should I do if I get a fake refund?

If you received the refund via direct deposit, contact your bank’s Automated Clearing House department and ask them to execute the return. Then, call the IRS to explain the situation.

If you received your refund as a paper check, void the check and mail it back to the appropriate IRS location with a note explaining the situation. If you already cashed the refund check, you’ll have to repay it using a personal check or money order.

In addition, the IRS recommends contacting your bank and tax preparer if you are a scam victim, as you may need to close your account and take other security precautions.

How can I prevent myself from being targeted?

Filing early will offer some protection, as the IRS will already have records of a return associated with your Social Security number and other personal information. But because the scam is largely targeting tax preparers, they shoulder much of the burden of prevention. The IRS urged tax professionals to step up security in light of the issue.

This article was written by Jamie Ducharme from MONEY and was legally licensed through the NewsCred publisher network.

The strategies mentioned in this article will often have tax and legal consequences; therefore, it is important to bear in mind that First Republic does not provide tax or legal advice. This information is provided to you as-is, does not constitute legal advice, is governed by our Terms and Conditions of Use, and we are not acting as your attorney. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the information contained here. Clients’ tax and legal affairs are their own responsibility. Clients should consult their own attorneys or other tax advisors in order to understand the tax and legal consequences of any strategies mentioned in this article.

Investment, Insurance and Advisory Products and Services, and Foreign Exchange Transactions, are Not FDIC Insured or Insured by Any Federal Government Agency, Not a Deposit, Not Bank Guaranteed and May Lose Value.

You're now leaving First Republic

By clicking Continue, you will be entering a third-party website. First Republic is not responsible for the content, links, privacy policy or security policy of this website.